In one paragraph
Buying a commercial property through a self-managed super fund and buying the same property through a company or trust involve genuinely different legal and financing structures, not just different lenders. An SMSF must borrow under a limited recourse borrowing arrangement, holding the property in a bare trust until the loan is repaid, with the lender's recourse limited to that one asset. A company or trust borrows conventionally, with a standard commercial property loan secured over the asset and, typically, director guarantees, and with recourse not limited to the single property in the same way. The right structure is a question for the buyer's accountant and financial adviser first, and only then a question of which lender and product to use.⚠
Side by side
|
SMSF commercial loan (LRBA) |
Company or trust commercial property loan |
| Structure |
Bare trust holds title; limited recourse borrowing arrangement |
Direct ownership by the company or trust |
| Typical LVR |
Typically up to 65–70% |
Typically up to 65–75% |
| Recourse |
Limited to the single asset held in the bare trust |
Not limited to the one asset; guarantees typically apply |
| Assessment focus |
Fund contributions, liquidity, rental serviceability |
Business or entity financials and serviceability |
| Best for |
Superannuation-held property, often owner-occupied by the member's business |
Property held outside superannuation, more flexible ongoing use |
When SMSF (LRBA) wins
An SMSF structure wins where the buyer specifically wants the property held within superannuation, often to hold a commercial premises their own business will occupy and pay rent for at market rates, building the asset inside a concessionally taxed environment. It suits members with an established fund, sufficient contributions and liquidity to support the arrangement, and a clear, compliant investment strategy that the trustees have documented properly before signing a contract of purchase.
When a company or trust structure wins
Buying through a company or trust wins for most other commercial property purchases, particularly where the buyer wants more flexibility than superannuation rules allow — using the property for purposes beyond a compliant related-party lease, borrowing at a higher LVR than SMSF lending typically supports, or simply not wanting the compliance overhead an LRBA carries. It is also generally the simpler and faster path to finance, since it does not require the bare trust and fund compliance steps an SMSF purchase involves before a contract can even be signed.
The compliance overhead of an SMSF structure is meaningfully higher than a standard company or trust purchase, and this should be weighed honestly against the tax advantages superannuation offers, since ongoing costs including the bare trust's administration, annual fund audits, and the fund's own accounting requirements add a layer of complexity and cost that a standard commercial property purchase does not carry. Where a business owner is considering an SMSF purchase primarily to have their own business occupy the premises, they should also plan for what happens if the business's circumstances change, since exiting a related-party lease or refinancing an LRBA is a more involved process than adjusting a standard commercial tenancy arrangement. Trustees weighing this decision should also consider the fund's diversification more broadly, since committing a large single property to a fund's overall asset base concentrates risk in a way that runs counter to the general principle of a diversified superannuation investment strategy, and this is a matter the fund's own documented investment strategy needs to address explicitly rather than gloss over.
Can you use both
Not for the same property, but a business owner might reasonably hold one commercial property inside their SMSF, occupied by their business under a compliant lease, while a separate investment or trading property is held through a company or trust structure entirely outside superannuation. Getting the SMSF-eligible property genuinely right — the bare trust, the fund's investment strategy, and the lease terms with a related-party tenant — needs sign-off from the trustees' accountant and financial adviser well before finance is even sought.⚠
Related
SMSF commercial loans · Commercial property loans · Bare trust · LRBA